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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Elizabeth Andrews who wrote (10777)	3/24/2004 12:14:40 AM
From: mishedlo	Read Replies (2) of 110194

The housing bubble is media babble as people like Noland and others are focused on the micro issue and not the macro. Housing can’t be imported and the public right now is choosing housing because it’s probably cheaper than owning the stock market as a store of wealth. It is no more complicated than that. Why have Japanese property values declined for 13 consecutive years?!! Does Japan imnport anything but oil? Regardless of whether or not housing can be imported it will reach a price level that is insane (possibly based on loss of jobs) and start declining. We might be there now. Clearly in some areas of the country there is 100% without a doubt a bubble. My dad died in Dec (danville Illionos) and we just sold his house for $15,000 (admittedly it was in horrid shape) but by any stretch of the imagination the "recovery" and even the boom years preceeding that just Passed Danvile by. As for the rest of the country, I do not know when or from what level or how long the decline takes but given the 0% down leverage and 1% rates, it probably would not take much to sink it. Housing in California seems totally insane for starters. Of cousre housing deflation is exactly what Greenspan is fighting and no one realizes it. Any level of inflation is better than the deflation trap of Japan to THIS central bank. Europe would have a different answer. We remember the great depression, Europe remembers the inflation in Weimar Germany. Here housing will not go without a struggle, but in the UK and Australia they are trying to kill a housing bubble. go figure. IF is not the issue, When and from Where, and the catalyst to start it is. Mish

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